Quantitative Business Analysis (QBA) Exam 2 Practice Test

In ANOVA, one key assumption is that the variances across groups are equal. Levene's test is designed to check that assumption. It looks at how far each observation is from its group center (using deviations from the mean or median) and then tests whether those deviations have the same variance across groups. If the test yields a small p-value, the variances are not equal, suggesting the equal-variances assumption may be violated and you might switch to a method that doesn’t require it, like Welch’s ANOVA, or transform the data. Other tests mentioned don’t assess variance equality: Shapiro-Wilk checks normality, Durbin-Watson checks independence of residuals, and Mann-Whitney compares groups nonparametrically without assuming equal variances. Levene’s test specifically targets the equality of variances.